"...despite companies trying to get free PR by saying they'll accept it, almost nobody uses it to buy anything other than drugs."
I stopped reading right there.
I stopped reading right there.
It's seems like any time a merchant announces they'll accept BitCoins, it will get pushed to the front page of /r/bitcoin and probably drum up some business because of it. I know of some local businesses who got online and print coverage for announcing that they're accepting BitCoin have hardly had any actual BitCoin activity.
I'd be interested to see if any of the big companies, e.g. NewEgg, Overstock, etc., have seen sustained business increases from accepting BitCoins.
So, the company isn't actually transacting in bitcoins.
Why would you go through the hassle and possibly loss of money to convert fiat to bitcoins then purchase things with bitcoins instead of just buying with fiat? You wouldn't, except that bitcoin is anonymous so you can use it to buy things privately. Most people really don't care enough about the privacy of an average amazon purchase to go through all this hassle.
When you're buying illegal goods, however, privacy is #1. And what is the most popular item on the most popular illegal goods marketplaces? Drugs.
Almost everyone I know that uses bitcoin is either speculating to make a quick buck, or using it to buy something on a darknet market. I'm sure there are people using it for everyday goods but it really doesn't make much sense to do that now unless you value your privacy very highly.
It used to be anonymous. It's now highly traceable due to AML and KYC having been introduced into the Bitcoin ecosphere by regulation.
Some countries have an official exchange rate, but a very different black market exchange rate.
In Venezuela , local bitcoin sites are selling BTC for the equivalent of over $6000USD at the official exchange rate.
If you manage to exchange them without being robbed a few BTC can pay for a hell of a vacation.
What's wrong with people using BTC to buy drugs?
How is it better or worse than people buying drugs with any other currency?
Why is it "bad" for Bitcoin to be useful and first adopted in that niche?
Other than it being illegal? Nothing.
But you're right to point out that, in sheer usage, Bitcoin really has nothing on the USD when it comes to buying drugs. Still, when you're asking why anyone would consider buying drugs with bitcoin to be wrong, you have to understand that not everyone considers that to be a positive or even entirely neutral act. Most people consider a currency whose primary use case involves breaking the law to be a net negative for society.
Most european governments do. Germany, UK, Spain, Italy etc. include revenue from drug trade (and prostitution) in their GDP.
Most people consider a currency whose primary use case involves breaking the law to be a net negative for society.
Do you really believe any law would be broken any less if Bitcoin didn't exist? Should we also condemn BitTorrent for the same reason?
The flaw that is raised isn't that BTC is used to buy drugs, but that it (in the view of those raising the complaint) doesn't have a strong use aside from buying drugs (and, while "drugs" are usually mentioned, the substance of the complaint appears to be more about drugs-as-popular-form-of-contraband rather than drugs-qua-drugs.)
And given the way governments tend to respond to things that (1) are primarily used to facilitate unlawful trade, and (2) become increasingly popular, its a real, if political, risk for the Bitcoin ecosystem.
And? Even if that was true, I don't see the point.
A large portion of internet traffic, quite likely the majority, is transporting porn or "stolen" movies.
Should we now condemn IP because it's mostly used for such despicable activities?
The point is in the paragraph after the one that you quoted a few words from the middle of.